Ladies and gentlemen, good day and welcome to the Q4 and FY 2025 Earnings Conference Call of Prince Pipes and Fittings Limited, hosted by MUFG Intime. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumeet Khaitan from MUFG Intime. Thank you, and over to you, sir.
Yeah, I'm audible?
Yes, sir.
Good morning, everyone. I welcome you all to the earnings conference call to discuss Q4 and FY 2025 results of Prince Pipes and Fittings Limited. To discuss the results we have from the management, Mr. Parag Chheda, Joint Managing Director; Mr. Nihar Chheda, Vice President, Strategy; and Mr. Anand Gupta, Chief Financial Officer. They will take you through the results and the business performance, after which we will proceed for question and answer session. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For more details, kindly refer to investor presentation and the other filings that can be found on the company's website. With this, I now hand over the call to the management for their opening remarks. Over to you, sir.
Thank you, Sumeet. Good morning, all, and thank you for joining us for our Q4 and FY 2025 financial results. The presentation and the press release have been issued to the stock exchanges and uploaded on our website. I hope everyone has been able to go through the same. The PVC pipe industry navigated a challenging macroeconomic environment during the year, marked by muted demand across key end-user segments. Furthermore, subdued government spendings in infrastructure and allied sectors led to demand softening and inventory destocking by channel partners in major markets. These challenges were compounded by high volatility in PVC resin prices, impacting both volumes and margins across the sector. Despite this uncertainty, our company remained focused on reinforcing its operational capabilities and executing long-term strategic priorities. A key highlight of the quarter was the successful commissioning of phase I at our new manufacturing facility in Begusarai, Bihar.
Designed for a total installed capacity of approximately 60,000 metric tons per annum, the plant has begun operations with an initial capacity of 24,000 metric tons per annum. With this addition, our total installed capacity has increased to 397,500 metric tons per annum. We are also undertaking timely capital expenditure across our existing facilities to support future growth. The balance capacity at Begusarai is expected to be commissioned with full capacity within the next six months. Strategically located, this plant enhances our ability to efficiently serve the growing market in Eastern India by reducing lead times, improving responsiveness, and optimizing logistics costs. In our bathware segment, Aquel, we continue to strengthen our retail footprint across key urban and semi-urban markets.
During the quarter, we expanded our presence with new showrooms in Uttar Pradesh and Rajasthan, adding to our existing outlets in Goa, Jaipur, and Pune. With over 200 retail touchpoints across India, we are steadily building a robust distribution network and enhancing brand recall in the high-potential value-added segment. We believe the bathware category will serve as a complementary growth driver to our core piping business and contribute meaningfully to revenues in the medium term. As part of our brand visibility strategy, we are actively expanding our presence across key travel corridors to connect with consumers on the move. We have collaborated with Indian Railways for branding on Vande Bharat trains, enhancing our presence on one of India's most prestigious rail networks.
Additionally, we are proud to announce our association with the Darjeeling Toy Train, a UNESCO World Heritage Site, further strengthening our brand's visibility at iconic high footfall locations. Such initiatives ensure that wherever our consumers travel, Prince Pipes remain a consistent part of their journey. In a significant sustainability milestone, we are proud to share that our CPVC product range is now officially GreenPro certified by the Confederation of Indian Industry. This certification underscores our commitment to providing sustainable, high-performance piping solutions and brings notable environmental, economic, and market advantages to our customers. Such certifications will help us become a preferred brand amongst the brands in the B2B project segment. On the innovation front, we introduced a new range of septic tanks under the brand BioFit for efficient wastewater management.
Designed to support safe effluent disposal through soak pits or dispersion trenches, these tanks promote natural filtration and purification, helping safeguard groundwater. This eco-friendly product aligns with our commitment to sustainable infrastructure solutions. Looking ahead, we remain focused on geographical expansion, product innovation, and operational efficiency to drive growth. With early signs of recovery in infrastructure and construction activity, we are cautiously optimistic about demand revival. We continue to monitor PVC resin prices closely and are implementing proactive procurement and inventory strategies to mitigate volatility. In conclusion, despite external headwinds, we are confident that our strong fundamentals, diversified product portfolio, and customer-centric approach position us well for sustained long-term growth. Thank you for your time. I will now hand it over to our CFO, Mr. Anand Gupta, to take you through the key financial highlights.
Thank you, Parag. Good morning, everyone. I will be taking you through the quarter four and FY 2025 financials now. Starting with quarterly highlights. Revenue from operations stood at INR 720 crores. Our volume for the quarter stood at [454] metric tons as compared to [451] metric tons same period last year. It degrew by 2% year-on-year. EBITDA for the quarter stood at INR 55 crores, degrowth of 41% year-on-year, while margin stood at 7.6%. Profit after tax for the quarter stood at INR 24 crores and PAT margins for the quarter stood at 3.4%. For the full year highlights, revenue from operations stood at INR 2,524 crores, degrowth of 2% year-on-year. Our volume for FY 2025 stood at 177,202 metric tons as compared to 172,793 metric tons same period last year.
EBITDA for the full year stood at INR 162 crores, while margin stood at 6.4%. Profit after tax stood at INR 43 crores. PAT margin stood at 1.7%. For the year FY 2025, our working capital stood at 99 days compared to 95 days same period last year. Receivables have shown marked improvement and now stand at 61 days from 83 days in March end. Inventory days stood at 88 days as on March 31st, 2025. With this, I now end my speech. I will open the forum for question and answer session.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nigel from EverFlow Partners . Please go ahead.
Good morning, sir. Thank you for the opportunity. Few questions from my end. Firstly, as an organization, we have had pressure on both margins and market share recently, and we hear that the industry leader is aggressive for market share. What are we prioritizing at this point? Is it margins or market share?
Yeah, thank you for your question. I think last year has been a tough year for the industry because of the negative sentiment with respect to PVC prices. As a result of which there has been de-stocking from channel partners, not only for Prince, but for all the players across the industry. Hence, in this kind of an environment, there was a lot of aggression seen in pricing. I believe PVC prices have bottomed out, and in fact, we have seen a slight reversal in PVC prices as well. Typically, if you see this industry, apart from the past maybe one or two years, we have always had profitable growth and we have always reinvested those profits into adding capacities and building a stronger brand.
This year, I do not think we will have that kind of a negative sentiment that we have had in the past year, and that reluctance of stocking
From the channel partners should not be the same this year. Our focus always remains on growing market share in a profitable way. It is not binary that we have to have one or the other. It has to be growth, but growth in a profitable manner. We are also adding capacities, and we are also wanting to become a stronger brand and keep investing money back into becoming a stronger brand.
Got it. What sort of growth and margin outlook do you have for the upcoming financial year, given these market dynamics?
I think this year, we should have double-digit volume growth, given that last year was a tough year. We will have a favorable base. Apart from that, we have added capacity with a new plant coming in Begusarai, where we have commenced commercial production in March. Given with the expanded capacities, affordability in PVC prices and real estate, which continues to do well, I think we should be having double-digit growth this year.
And also for the margin, sir?
Margins are a function of multiple levers. One is product mix. Second is pricing power, which was obviously last year, which was under pressure. Third is operating leverage. The more we sell, the more profitable we are. Like I said, with additional capacities coming in, there should be good volume growth, which helps with cost absorption. Over the long term, we would still maintain our guidance of around 12% EBITDA margin for the long term.
Got it, sir. One final question from my end. Are you seeing any opportunity or uptick in institutional sales for this, or do you see that being a meaningful part of the business for us going forward?
The institutional sales we have typically stayed away from because of the extended credit cycles. We do participate in these kind of institutional projects, be it Jal Jeevan Mission or Swachh Bharat, but we participate through our channel partners, so that we do not take the credit risk directly on our books. We selectively participate in these programs, and whenever we do, we do it through our channel partners. We rarely take the credit risk directly on our books. But going forward, I think the focus of the organization continues to be growing the distribution footprint for the retail business and growing the projects business by building our relationships with developers and contractors and plumbing consultants across the country.
Understood. Thank you, sir.
Thank you. The next question is from the line of Shravan Shah from Dolat Capital . Please go ahead.
Yeah. Before asking the question, just two, three data points, sir. For this quarter, bathware revenue and EBITDA loss.
For this quarter, for the full year, I will say, the bathware had clocked INR 30 crores. This is what the number is. If we talk about this quarter, sale was around INR 10.5 crores, and loss for this quarter was in the range of INR 4.5 crores.
INR 4.5 crore. Okay. In terms of the water tank for FY 2025, what would be the revenue and even possible for FY 2024?
For full year it is around INR 48 crores, for full year.
And for FY 2024, was it 37, 38 crore?
Yeah, it was around 40 crore. 38 to 40 crore, yes. We have-
Okay.
-seen around 20% growth over there.
Now a question, again, coming back to one on the volume front. Just trying to understand. For this Bihar, Begusarai, we started 24,000 tons, and in next six months, we will be adding another maybe 35,000, 36,000 or to reach a 60,000 tons. If you can help me, even in my calculation also, just suggest that even if we do a decent kind of a 20,000, 25,000 tons from here, assuming, then also and plus the core growth should be. We should be doing at least a kind of a 15% kind of a volume growth, but we are saying at a double digit. If you can also specify double digit, does it mean a kind of a 15% kind of a range, or it is more close towards a 10% growth?
15% also is double digit, but given so many variables that are there in the market, we have always been conservative with guidance, and then we prefer to let the numbers do the talking, and that is how we have always done it since day one. The point being, there are a lot of positives that I see this year compared to last year that I have spoken about. We have added capacity. We are doing the right things as far as demand generation is concerned, which I spoke about in terms of adding to the distribution network, adding new products, and investing in the brand and focusing on building a relationship in the B2B space. We are doing everything that we can in terms of demand generation, and we are adding capacity.
If and when the demand picks up, we do have that additional capacity to be able to service that. Because, see, no one can predict uptrends in demand. We have seen that with our experience in the industry, that supply creates demand. If we have product, we will be able to sell it. We cannot exactly predict when the demand will come. Our point is we should have the strength of the supply chain as well as the capacity to be able to service the demand. That we have built, and whenever that uptrend in demand comes, we will be able to fulfill it because of the kind of inventory we are working on as well as the kind of capacities we have built.
Okay. Just to add more on Yes.
Sorry to interrupt, sir, but I may request you to rejoin the question queue for follow-up questions.
Okay. No issues.
Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. The next question is on the line of Praveen Sahay from PL Capital. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. If you can give any numbers or color on, is there any inventory losses for you for this quarter? If, then how much is that?
It is around INR 25 crores for this quarter, the inventory loss.
Okay. If you can give some color on the pricing scenario right now, because a couple of days back there is some reversal in the PVC resin prices. On the PVC resin prices, how you see the way forward or even the ADD, if any information you can give on.
Sure. I think you are right. We have seen an increase in PVC prices of INR 1,500 per metric ton a couple of days ago from Reliance. I am keeping ADD aside first, without ADD. I do not expect a very sharp uptick in prices. I think prices will continue to remain stable. The good part is that the negative sentiment will not be there. There will not be a resistance to stock material, as there is no threat of an inventory loss for the channel partners as well. That is the one positive. I think we will see a stable price environment and affordability in PVC. As far as ADD is concerned, there has been a lot of talk about ADD since the past two or three quarters. I prefer not to speculate on these things because this is related to the government and the DGTR.
Whenever it comes, I think PVC will continue to be range-bound, but you will see a recovery. Whatever PVC today is maybe around INR 70 per kg, this could move to around INR 75 to INR 80 a kg. You could see a slight uptick. Again, I do not see a major irrational upward movement of PVC. It will continue to be stable and range-bound and affordable. That is where PVC prices are. I think we can safely say it has bottomed out, and there is no negative sentiment in the channel as far as stocking of inventory is concerned.
Really helpful, sir. On the inventory side, if you can give a color on the higher side of your inventory. Is it related to the finished good or the RM you are carrying from the last three quarters?
One is you have seen a reduction in overall inventory from December to March. There has been a significant reduction. This is a combination of both finished good and raw material. We have built infrastructure to be able to hold higher finished good material. That is something that we don't want to reduce. Because again, it's a supply-driven industry. The point is that once you lose a sale, it is lost forever. We need to have very strong finished good inventory. Raw material inventory is on the higher side, where like we said in the opening remarks, we have relooked at our strategy, reevaluated our strategy. Raw material inventory will normalize by the end of this quarter or the beginning of Q2, and we will continue to then have a tight control on raw material inventory.
Finished good inventory, we will continue to hold at a healthy level going forward.
Okay. Thank you, sir, and all the best.
Thank you.
Thank you.
The next question is from the line of Keshav from HDFC Securities. Please go ahead.
Hi. Thank you for the opportunity. Firstly, congratulations on a steep recovery in margin Q1. The first question is, we have seen your realization has improved sequentially when resin prices were declining. Is there some change in mix?
Can you repeat the question, please? Sorry.
Normally the resin prices were declining, so ideally the realization should have been lower Q1. We see for the company it has improved. There has been some change in mix, I am assuming. What sort of mix have seen? Can you give some color on that?
Yeah, we have had a better sale of value-added products, CPVC specifically. We have been growing in CPVC at a good pace relative to PVC, and that trend has continued in the March quarter. As a result of which we have seen an improvement not only in realizations but also at the operating margin level. It's a function of product mix as well as cost absorption.
Understood. Got it. Can you quantify what is the CPVC growth year-on-year for you at the company level? Maybe for FY 2025 or Q4 something.
It is a double-digit growth in CPVC for March quarter as well as for the entire fiscal. As you are aware, we don't give segmental data, but there is a double-digit growth and overall, obviously there is on an annual basis, we have grown by 3%. It has been driven largely by CPVC.
Understood. Got it. That is helpful. One last question from my side. Sir, on the incentive which you were giving 3% last quarter, how is that right now? Have you decreased the incentive to the dealer?
That continued in March quarter and that is continuing in Q1. We have added capacities. We will continue to focus on growing. Like I said, it has to be done in a profitable manner with a slight reversal in PVC prices and a clear signal of bottoming out. Now, I think we will be able to, with time, not have to be that aggressive on pricing going forward. These things take time to reverse, and we don't want to shock the channel. But I'm sure the sentiment now is much better than what it was in the second half of last fiscal.
Got it. Channel inventory is normal, or will it get to normal? As you were highlighting, the PVC pricing has seen an uptake, channel inventory getting normalized. How is it now?
Channel inventory as we speak is low.
Understood.
For my channel partners because of the reluctance to stock material. Channel inventory is low. I think with this increase in prices, I do not see some very sharp U-turn recovery of PVC prices. I think prices will continue to be stable. As a result of which finished goods will continue to be affordable. But I believe now there will not be any resistance to stock. Dealers can maintain normal inventory level, which is very good for the industry. Low volatility of input prices and distributors will not speculate and try to have high restocking or destocking, which is good for the industry. That PVC prices remain affordable, as a result of which in a pass-through industry, finished good prices also will continue to remain affordable.
With players like us adding capacity aggressively, we will be able to focus on long-term growth that the industry will have. We will be able to be a major beneficiary of that growth.
Understood. Got it. Thank you. I come back into you.
Thank you. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead. We take the next participant. The next question is from the line of Pritesh Chheda from Lucky Investments. Please go ahead.
Yeah. Hi. I missed the inventory loss number for Q4 in FY 2025. Can you give me the bathroom losses for FY 2025?
25 crores for the Q4 inventory loss and bathroom is around INR 4.5 for the quarter. Full year around INR 17-INR 18 crores.
Inventory loss for full year?
INR 85-INR 90 crores.
Okay. The other thing is, sir, are we doing anything? So let's say the inventory is materially up versus the way business was conducted about four, five years back. Are we doing anything incrementally whereby we can relook at the way we manage our inventories? Number one. And number two, let's say from the industry perspective, what we are seeing is there are many more players are getting added versus what the industry was, let's say, five, seven years back. And many more capacity is getting added, people cross-selling, within the brands also. Does it mean that it is, let's say, a slower growth for incumbents and a different margin profile or let's say, EBITDA per kg profile than historically that we have seen on averages for incumbents including you? I have these two questions.
Yeah. Thank you, Pritesh. I think first question. Let me talk about inventory in two parts. One is raw material and second is finished good. Finished good, in fact, we have made investments over the past 24 months to improve our infrastructure across facilities to be able to keep around 30 to 40 days of finished good inventory. That is something we will not shy away from. We are an industry where supply creates demand. A sale lost once is a sale lost permanently. So finished good inventory, we will keep a healthy level of finished good inventory. Raw material inventory, like I said earlier, we have reevaluated our strategy and we have increased our domestic contracts. Our dependence as our capacities grow, as we become a larger, more organized player, we have no problem reevaluating our strategy, and we have implemented that as well.
We have already improved our domestic sourcing, which means that we can keep a lower inventory level. So going forward, I believe around 30 days of raw material inventory and 30 to 40 days of finished good inventory. So around 60 to 70 days of inventory is what is a sweet spot for us that we have evaluated, and that is one change, and we are happy to implement that. We have already done that. So that answers the first part of your question. Second part of your question in terms of competitive intensity. I have a slightly different view to this. Yes, there are new entrants in the industry, which, one, signals the kind of long-term profit pools that are available for the industry and the kind of growth that the industry will have over the long term.
Clearly, within the building material industry, piping has been, if you look at the past decade, has been the fastest growing industry and we have been able to do that in a profitable manner, but in the last, let's say, four or five quarters. The good part is any of these players that are coming in are branded players, corporate players, who will always have a disciplined approach to pricing, to quality, to credit control. Around 30%, 35% of this industry continues to be unorganized. So I am very happy to compete with organized players where there is a level playing field with respect to pricing and quality and credit.
I am not comfortable competing with unorganized players who just has two extruders in their workshop, gives a substandard or a non-standard product, does all kind of financial mismanagement, then it is not a level playing field as far as cost structures are concerned. I am happy to compete with organized players. This is a category which is behind the wall, and we are seeing a higher awareness of brand going forward. As a result of that, I believe big will continue to get bigger. I am very happy to compete with organized players rather than compete with unorganized players. Lastly, I think it is very important to also see the microeconomics for it. For a builder today, piping cost is less than 1.5% of the overall project cost.
Even if he is getting a new brand 10%-15% cheaper, he is not wanting to experiment with piping because overall impact on the project cost is not significant. Whereas if you try and experiment with a new brand and there is any leakage in the pipes, the nuisance value is far higher in terms of the brand image of the builder. I believe this brand consciousness will only increase in this industry, and which is why we are aggressively investing in the brand year on year. I believe this will continue to consolidate. Any addition in capacity, whether it is from incumbents like us or from new entrants, I believe the people losing the market share are the unorganized players. I hope that gives you clarity.
Just on the-
Sorry to interrupt, sir, but I may request you to rejoin the question queue for follow-up questions.
Okay.
Thank you, sir. The next question is from the line of Utkarsh from BOB Capital Markets. Please go ahead.
Yeah. Hi, good morning, sir. My first question is on your gross margin for FY 2026. If you adjust for inventory loss of INR 25 crore, then our adjusted gross margin stood at 28.5% for this March quarter. Wanted to understand from you, can we maintain similar kind of a gross margin for FY 2026? Or do we see a risk to this number due to rise in competitive intensity in the sector?
This number we have achieved despite the competitive intensity. It's a function of, one is product mix and operating leverage. Product mix has been favorable in the March quarter like it usually is, especially from the plumbing segment, both CPVC and UPVC plumbing, which tend to be higher margin products. Q1 is usually agri heavy for the industry and for us. But on an annual basis, we are confident of being able to achieve this kind of a margin.
Okay. My second question is on your CapEx. What would be our CapEx guidance for FY 2026 and for Bihar project, if you can specify how much we have spent till March 2025 and how much we are planning to spend in FY 2026.
I will start with the Bihar, what we have done in FY 2025. We have installed 24,000 capacity and related infrastructure for which we have capitalized around INR 180 crores in our books of accounts. Remaining is around INR 70 crores, which includes infra as well as new capacity, means it will take to around 60 KT in next six months, we will be investing. FY 2026 has a spillover of INR 70 crores on Bihar front.
We have a capital commitment on Aquel brand around INR 43 crores and internal CapEx related to new Bhuj plant will be around INR 7-INR 8 crores. It will be around INR 50 crores on that front. Internal CapEx for existing seven plants for operational maintenance and replacement CapEx will be around INR 100 crores. Around INR 220 crores will be the CapEx plan for FY 2026. In this, only INR 100 is related to ongoing maintenance of plants, and INR 120 is one-off, which will give us a good capacity expansion in both bathware as well as pipes and fittings in East India.
Okay, got it, sir. Lastly, your gross asset turn has gone down sharply from roughly 3x during pre-COVID to now 1.9x. I just wanted to understand what should be the sustainable gross asset turn for you over the medium-term period.
Yeah. Utkarsh, the reason for that is twofold. One is a lot of the capacities have been added in the past four years. If you see in the past four years, three new plants have been put up, Jaipur, Telangana, and now Begusarai. Apart from that, existing plants, debottlenecking also has happened. I think we need to see this in the long term. A lot of new capacity has been added and three greenfield plants. Existing plants, when you debottleneck is relatively cheaper. But when you are putting up greenfield capacity, one, you are investing in land and you need to set up the infrastructure, which is a large part of the overall cost structure. One more thing I would like to highlight is at all the three plants, Jaipur, Telangana, and Bihar, we have invested heavily in land.
Jaipur is more than 80 acres, Telangana has more than 45 acres, and Bihar is more than 35 acres. At existing plants, we were seeing the kind of infrastructure challenges we had, and we were not able to debottleneck these plants. At the new locations, Jaipur, which is for north and west, Telangana, which is for south, and Bihar, which is for east, all three strategically located for long-term growth. Now we will be able to debottleneck over the next five, six years. We will continue to really sweat these assets and keep adding capacities, because now land will not be a bottleneck in terms of adding capacity and keeping finished good inventory. That is why you are seeing a reduction in the asset turns. Further, the revenues have not grown because of the decline in PVC prices. I think it's a double hit.
But I think this will normalize going forward as we continue to grow aggressively in terms of volume over the next two, three years, and we sweat these assets. I think you will see a recovery in the asset turns. Hope that gives you clarity.
Okay. Thanks a lot, sir.
Thank you. Participants are requested to limit their questions to two per participant. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Good morning, team. Thanks a lot for the opportunity. Just couple of questions. How is the demand currently doing? While I understand you said that PVC prices have bottomed out, there is somewhat of restocking happening. Just wanted to gauge that how is the agri demand, how is the demand from the plumbing side, and how much restocking alone can actually lead to growth in FY 2026. Some sense there would be helpful.
Thank you, Sneha. One is I don't think there will be very aggressive restocking, and we don't want that to happen also. I think what is good for us and for the industry is if the dealers just keep a healthy level of inventory, because when there's speculative restocking, that also then eventually leads to destocking. Of course, there's a function of PVC prices. If I have to guide sitting today, looking at the factors that are in front of me, I believe that you will have a stable PVC pricing environment, which will lead to stability in terms of the inventory that the channel keeps, which is good. You will not see very aggressive restocking or destocking. Prices have bottomed out, so now there is no reluctance to keep a normal level of inventory that the channel would keep.
The price increase has just been announced two days ago, so we will see how that pans out. But sitting today, what my understanding is that you will have a healthy level of inventory that the channel keeps. We don't expect some very sharp movements, which I think is good.
I mean, just to rephrase my question in that case, how much are we away from that normal level of inventory? Can it lead to 2%-3% growth to reach a normal level? I mean, some sense there is what I was just thinking about.
Usually, I think channel would be keeping around, depending on market to market, but around three to four weeks of inventory. I think that today would be around less than two weeks. That's how we see it in terms of channel inventory.
Understood. Secondly, my question was more on the CPVC side. We see a lot of incremental capacity coming up in CPVC resin side. Of course, you are tied up to Lubrizol. Lubrizol itself is coming at large capacity and as per my channel checks, I think Lubrizol would also be open to giving this or reasons that apply to, I think, even other players. What's the sense that you have? Are you open to then taking it only from Lubrizol? Would you see changes happening in your raw material sourcing on the CPVC front also? As the CPVC supply increases, what's your sense on the market share then, in that case? Because so far, market has remained a lot more consolidated because of non-availability of supply to a lot of smaller manufacturers.
With so much supply coming in the market with CPVC, are we going to see segmentation of this market different across?
Yeah, I think it's an important question. I think CPVC till now in India, we have been deficient in terms of supply. I believe CPVC industry is on a very interesting cusp of growth. The kind of capacities that are being put up, whether it's by MNCs or by local players, there is very aggressive capacity addition. You are going to see a very affordable CPVC raw material, and as a result, finished goods pricing over the next three, four years. I think this goes back to decades ago when this happened with PVC as well, which led to a mass consumption of PVC across the country. Today, India is one of the largest consumers of PVC. I think we are on that kind of a cusp for CPVC.
I think this is just the start in terms of the acceptance of CPVC and the consumption of CPVC across multiple applications, be it plumbing, firefighting, and industrial. I believe, again, this is a very sensitive use case for the builder. It goes in the concealed application for plumbing. Today, 80% of the market is with top four of us. I do not see any major shifts. Yes, there will be access to smaller players, but I think this is an extremely brand-conscious segment, and a very sensitive use case, because it goes into concealed application for hot and cold water plumbing. I think net-net, there is more to gain than to lose for a large player like us who already has, let us say, more than 10% market share in this segment.
We are aggressively adding capacity, and we are extremely bullish on the growth of CPVC over the next few years.
Just lastly-
Sorry to interrupt, ma'am, but I may request you to rejoin the question queue for follow-up questions. Thank you. The next question is from the line of Arun Baid from ICICI Securities. Please go ahead.
Yeah. Thank you. Nice to hear your discussion on the inventory part you mentioned. But if I look at your previous years' numbers, FY 2024 was [62] days, FY 2023 was 37 days, FY 2022 was 85, and FY 2021 was 40 odd days. What I am trying to get to is that is this 70, 75 to discuss, we will see that one maybe hopefully by the September when you report, or is this a new normal that you believe is-
Sorry, I am not able to hear you. The voice is breaking up. Can you repeat? I think there is some disturbance on the line.
Is it better?
No, I am not able to hear clearly.
Okay. Hello. Can you hear better?
Yeah. Please go ahead.
Yeah. I am just trying to understand the inventory part. This year we had obviously 88 days of inventory. But if I look at the previous years, FY 2024 was 62, FY 2020 was 57, and FY 2021 was 40 odd days. What I am trying to get to is this 75 the new normal you believe is a sweet spot for us?
It is very important to see inventory as an average across the year. The number that you are referring to is the year-end number.
Which there have been years where we have stocked out. If you look at some of those years, just before COVID and just after COVID, we have seen finished goods stock-outs happening because of very aggressive growth that we had in those years. I do not think that is a fair estimation of what our inventory was in that year throughout the year. It is just a case of at one point of the year, that was the inventory. There was an aggressive consolidation that was happening in those years, and we were a major beneficiary of that consolidation during that period. But that, you referred to a few years where the inventory maybe was, let us say, 40 days or 50 days. That is still not a reflection of what my inventory was throughout that year. That is just at one point of the year.
Going forward, I think 60 to 70 days is our sweet spot. 30 days of raw material is a healthy inventory, and 30 to 40 days of finished goods. We have increased our inventory of finished goods over the past two, three years as we invest in infrastructure to be able to keep better finished goods inventory, to be able to serve any uptick or any uptrend in demand. We have taken a conscious call. But overall inventory, 60 to 70 days is what is healthy for the organization.
Okay. Just to confirm question, this can be seen by September of this year when you report your variances. Is that correct?
Correct.
Okay. One request here. This would be very nice if this can be done because this has been a major concern for most of the investors because, we discussed this last call also. A huge variation and it will lead to a lot of losses. If this can be addressed, it will be good for investors. Thank you.
Yeah, thank you. I think we have already noted this. Not only have we noted this, but we have also changed our strategy of raw material and increased exposure to domestic contracts as well as we are growing our capacity. We are always happy to be dynamic with our strategies and keep in touch with the ground reality of the market. Yeah, I think 60 to 70 days is what we should be ending the September quarter.
Thank you. The next question comes from the line of Moksh Ranka from Aurum Capital. Please go ahead.
Hello. In your previous call, you have mentioned that for your Aquel, which is your bathware brand, you would like to at least benchmark it with Jaquar, if not higher. Could you just give me a sense on how are sales realization for the comparable quarter? Hello?
Yeah. Can you repeat the question?
Yeah. I am so sorry. In your previous calls, you had mentioned that you would like to benchmark your Aquel brand, which is your bathware brand, with Jaquar, if not higher. Could you just give a sense of how a product Hello? Hello?
I think I understood the question. If I can answer. Product positioning is something is very interesting, which any industry leader which has been in the industry for decades, like we have in pipes, you cannot replicate that overnight. End of the day, brand is nothing but long-term perception building. That will not reflect in sales realization, especially not in the first year of the business. This is just where we are positioning the product in terms of range, in terms of design, in terms of service capabilities that we provide after sales, which is a very big part of this business. We are very open to learning. While there are a lot of similarities with the pipe business, there are also a lot of things that make this business unique.
Pipes, there is no after-sales service like that is critical to the success of the brand or the business. Whereas in bathware, it is a major thing. Whereas range, I look at very similarly today. In pipe, one of our biggest USPs in the marketplace is a very wide range of products across plumbing, sewage, underground drainage, industrial, borewell applications. Similarly, in bathware today, we have ranges across different price points. Today, if a consumer wants to build a bathroom and has a budget right from INR 60,000 per bathroom to INR 15,000 per bathroom, we have a range and a collection in the faucets and sanitary ware business. That brand positioning is where we are striving to position ourselves versus the incumbent. It would be wrong for me to say that whether we will achieve that in the first or second year, that would not be something which is practical.
That is our vision for the brand, which will be built with investing in the right team, investing in the right product, and investing in the brand and strengthening our relationships with our channel partners. I think with these levers over the long term, that kind of brand positioning will be built.
Okay. And for the pipes business, how have the April and May months been currently in terms of demand and also Yeah, just in terms of demand.
I think if you see right now, we have just seen the increase in PVC prices, so it is hard for me to comment. I think it is too early. Let the quarter play out, in terms of how it reacts. I think there is a clear signaling of bottoming out of PVC prices, which when we interact with our team and our channel partners, we sense that now there is no reluctance to keep stock. This has come, I would say, just this week, which is on May 20th. I think still some time for us to be able to comment on it. Let us see how things stand.
Okay. That is it from me.
Thank you. The next question is from the line of Udit Gajiwala from YES SECURITIES . Please go ahead.
Yeah. Hi . Just one question on the volume front. Double-digit, even if we capture 10%-15% growth. Can you just tell me what kind of volumes can we see from the Begusarai plant for the whole year?
We have already put up 24 KT of rated capacity, which will be scaled up to 60 KT in the next two quarters. This is installed capacity. Typically, to reach 60%-70% utilization, would take around two years. I think this year we could see around 20-25 KT coming in from the Begusarai facility. Maybe from FY 2027 onwards, we would see closer to ideal capacity utilization. I think 24 to 36 months is a fair benchmark to reach the ideal capacity utilization.
If we are just assuming 20 to 25 times from your new plant, and you guide for double-digit growth, assuming 10% to 15% is what you mean. Then the ongoing plans that we have, there we are expecting a flattish growth again. There may be something that I might be missing, but if that is the understanding, then
No. Let me clarify that. Just because we have put up capacity does not mean that demand is going to grow. I think when you put up capacity, you put it up with the vision of growth in the industry and across sectors of building material, agriculture, and infrastructure, which are the three verticals that we serve. The point is, you can never predict when there is going to be an uptrend in demand. In the past, we have seen times where we have seen very sharp uptrends in demand because real estate doing well, agri doing well, affordability in PVC prices, and I am seeing a lot of confluence of those factors coming in this year. Point is, we need to do what we do in terms of demand generation.
Like I spoke about adding distributors, adding new products, investing in the brand quarter on quarter regardless of how profitability is, because we build brand over the long term. We have to do what we do in terms of demand generation. Then we have to add capacities to be able to cater to that demand. When that uptrend will come, no one knows. Point is, whenever that happens, we need to have inventory, we need to have capacity to be able to fulfill that demand. Result is not in our hand, process is in our hand. We are doing both the things that we can as far as the demand side is concerned and as far as the supply side is concerned. We have seen times where we have aggressively worked on demand generation, and we have not added capacities at the right time.
Once you lose a sale, it is lost forever. As an industry leader with a strong balance sheet, we need to keep adding capacity to ensure whenever those uptrends come, you are able to fuel that demand with the right supply. We are being ahead of the curve with adding capacity. We have traditionally always done that, and we will continue to do that going forward.
Got it, sir. Sir, if you may just let us know that Begusarai is for the eastern markets. Currently, from which plant were you catering this market? It is not from Begusarai.
From the Haridwar plant, as well as from the outsource manufacturing, which we had for one product category, SWR pipes in-
Okay
Hajipur, Bihar.
Okay. That helps, sir. Thank you.
Thank you.
Thank you. The next question is on the line of Shravan Shah from Dolat Capital. Please go ahead.
Yeah. Sir, just maybe a straightforward question. When we are saying double-digit volume growth, does that mean that in Q1 itself, can we see the same double-digit kind of a growth, or we will not be able to guide?
Like I said, the PVC price increase has just been announced, so we need some time to assess how things pan out. The guidance, of course, is for the full year.
Yeah. In terms of now the prices are stable and obviously the INR 1.5 increase has happened. So in terms of adjusting the inventory losses, can we now start seeing from Q1 itself a double-digit EBITDA margin? If not the 12%, which we are looking at for full year. If possible, if you can help us, at least we can see an 11% kind of EBITDA margin in FY 2026?
I think a 12% EBITDA margin is a long-term guidance. I will stay away from speculating in the middle of the quarter. I think there will be inventory loss in Q1 as well. The extent we need to see. You have seen the recovery in margins Q3 to Q4. A lot of things we are working on, both in terms of product mix, in terms of cost optimization, and in terms of seeing how we can get pricing power back as sentiment improves. Of course, the margin recovery for the full year, there will be a significant improvement in margins this year compared to last year.
And if possible, sir, CPVC and PVC industry growth in the Q4 and FY 2026 and possible for FY 2020-
Sorry to interrupt, sir, but I may request you to restate your question.
Yeah, just the last one. Many people have asked more than two. Last time I did not politely exit. Let me complete this. Just, sir, last thing on the industry growth for PVC and CPVC for Q4, FY 2025, and how we are expecting for F
Yeah, I think Q4 has been flattish for the industry. I think for full year, there has been a slight degrowth for the plastic piping industry. So I think Q4 was flattish, but full year, I think there would be a low to mid digit degrowth at an industry level. So I think larger players have still hold on to volumes at the cost of the smaller unorganized players.
This is for PVC and for FY 2026, how much industry likely to grow?
I think, again, tough to speculate, but I think because there should be, I think, 5%-7% growth is what I can say for the industry sitting today.
And same for CPVC Q4 FY 2025 and FY 2026?
I am talking about this is all blended, all put together. I am talking as a piping industry.
Okay, because your presentation and then the last couple of slides where we mentioned about the industry, where we are talking about a 5% volume CAGR for PVC, and in terms of the overall volume, value terms are 10%-12%. Does that mean, are we looking at a 4%-5%, 6% price CAGR till FY 2030?
I think pricing, of course, will improve with PVC prices bottoming out and growth of value-added products like CPVC and other polymers. I think safe to say over the next, if we're talking three to five years, value growth should be higher than volume growth at an industry level, given improvement in PVC prices because they have bottomed out and growth of other value-added products.
Okay. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Keshav from HDFC Securities. Please go ahead.
Sir, when are we expecting breakeven in the bathroom segment?
I think another four to five quarters.
Another four means in FY 2027. Earlier, we were expecting in FY 2026, so it is not ramping up as expected.
I think FY 2024 quarters would be FY 2026, four to five quarters.
Got it. One last question. What was the ad spend in FY 2025 as a percentage of sales or absolute, and how will it be in FY 2026?
As we have always maintained, around 2% is something what we are maintaining. We will keep on having the same number for the next year also. For this year, we have spent around INR 53 crores, which translates to around 2.2%, and the same kind of level we will be investing in the next year as well.
That is helpful. Thank you.
Thank you. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Thanks a lot for the follow-up. We were talking about the industry growth rate, where you said that this year we've seen a degrowth. What is the expectation on the industry growth side, both on the PVC and the CPVC front?
I think this year the industry should grow by 5%-6%.
You mean PVC and CPVC put together, sir?
I think growth will be led by CPVC with improvement in local capacities and rationalization of pricing. Since the base is favorable, I think PVC should also have growth. It's tough for me to comment segment-wise what the growth will be, but of course, CPVC base being smaller, capacities being added, affordability increasing. Growth will be led by CPVC, but I think next year PVC should also see good growth at an industry level, and then of course for larger players.
Both put together, we are talking about 5%-7% growth, right?
At an industry level, yeah.
Understood. Lastly, on the OPVC front, we've seen other players, be it Astral, be it Supreme, Apollo Pipes, all of them enhancing capacities. Where are we? Are we contemplating it? If yes, what's the technology that we are looking at?
Currently, I think we are not evaluating OPVC. We are focusing more on new products, which will be for the retail and the private B2B projects. I think it's a conscious call to stay away from businesses that are more driven by government sales or infrastructure sales. We could evaluate in the future, but as of now, there are no plans.
Understood. Lastly, if at all I may. On the HDPE front, where are we? We had invested here. What's the kind of utilization are we running at? Some sense, is it forming any meaningful proportion to our revenues?
As of now, I think growth is still driven by CPVC and PVC. Specific capacity utilization for HDPE, I think Anand can share with you offline. I don't have it handy, but the growth in last year and Q4 has mainly been driven by CPVC and PVC.
Understood. Thanks a lot, team, and all the best.
Thank you.
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you all for attending the call. Thank you.
Thank you. On behalf of Prince Pipes and Fittings Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.